Research On The Effect Of Stock Liquidity On Company Value

The decision of company value is the key research topic of financial theory,which is the research direction of system of valuation method getting better.Whether the traditional company value mainly from the company’s financial management perspective,study the rationality of corporate capital structure,profitability or asset operation efficiency of pure theory of corporate finance,while ignoring the market microstructure factors including stock liquidity,the role of.Stock is a medium that can be transformed into the cash flow and control rights of a company.The ease of conversion plays an important role in corporate governance,investment decisions and performance.Since the establishment of the financial market,along with the financial crisis and the economic crisis again and again,the relationship between the financial system and the real economy has become the focus of attention again and again.So does stock liquidity have an impact on the company’s value?How does stock liquidity affect the company’s value?What are the specific mechanisms of action and the ways to affect it?After non-tradable shares reform,is the institutional investor,as the largest shareholder in circulation,has an impact on the relationship between the liquidity of the stock and the value of the company?This requires us to study further.This article from the microscopic point of view,select the 2006-2015 in China’s A share listed companies as samples,and multiple linear regression method is used to test the impact of stock liquidity of Chinese listed companies on company value.The results show that the liquidity of stock is positively related to the value of the company.And further from the two aspects of agency theory and information theory,the mechanism of the action of stock liquidity on the value of the company is investigated.To improve stock liquidity through improving the executive compensation incentive(management compensation and managerial ownership)to inhibit opportunistic behaviors of the executives,and improve the liquidity of the stock will increase by the stock price information content,information rich stock increased the price increase the information content of performance is useful to improve the effectiveness of the decisions of the company to include,in order to have a positive effect on firm value.Besides using instrumental variable method to solve the endogeneity problem,we use the non-tradable shares reform as stock liquidity shocks,combined with the propensity score matching and double difference estimation method based on hypothesis is verified to improve the empirical study reliability.Finally,based on the results of theoretical analysis and empirical research of this paper,separately from the government,enterprises and investors in three aspects,the government should improve the system foundation of the securities market,to strengthen the management of investors,prohibit insider trading and other illegal activities;enterprises should be more effective compensation system design to improve the transparency of information,investors follow the value investment strategy;rational investment,institutional investors participate in the corporate governance of the company,the implementation of effective supervision.